Today, however, America's New Economy is the home of not-so-new stories of failure and disappointment as dot-com jobs evaporate by the thousands and people who once toiled in cyberspace find themselves pounding real pavements in search of work.
How difficult will it be for these people, especially those in top management positions, to find new jobs? Will their dot-com experience count for or against them? If they worked for traditional companies before jumping ship to dot-coms, will Old Economy employers be willing to hire them back?
Wharton management professors and executives in the recruitment and outplacement industries say the answers will largely hinge on the individual experiences and talents of the job seekers. But overall, they say, the slowdown in the broader economy and a rising tide of general unemployment is not helping matters for anyone.
Most out-of-work dot-commers are unknown and unheralded. But some, like George Shaheen, are prominent executives whose arrival and departure from Internet start-ups can be seen as emblematic of a once high-flying sector that has fallen to earth. Shaheen, 56, left the top post at Andersen Consulting, now Accenture, in 1999 to become chairman and CEO of Webvan, an online grocer. But Shaheen resigned from Webvan in April, saying the company needed "a different kind of executive" to lead it through tough times. Webvan's stock, which traded as high as $25.44 in December 1999, traded recently for less than 15 cents a share.
Shaheen was not the first high-profile CEO to leave a dot-com, and he will not be the last. On May 7, Priceline.com, an online travel service, announced that it had dismissed its CEO, Daniel Schulman.
Since August 1999, outplacement firm Challenger, Gray & Christmas has recorded the departures of 1,701 CEOs from dot-coms, 389 of them this year. The reasons for the departures ranged from retirement and resignation to being replaced and finding new positions.
In its most recent monthly survey, Challenger also reported that weak earnings reports appear to be taking an increasingly heavy toll on the chief financial officers of dot-coms. The firm says 71 CFOs left dot-coms in April, eight more than the number of CEOs who left. The reason: Companies may be putting greater emphasis on how money is managed as opposed to how the company is managed.
The survey also noted that the number of departing CEOs in April was 63, the lowest figure in 12 months. The decline in the number of CEO departures may signal that companies will retain some stability during a turbulent period. But Challenger also said that the number of total cuts in U.S. Internet jobs jumped 84 percent in April, to 17,554. That beat the previous record month for job losses--12,828 in January--and brought to 54,564 the number of dot-com jobs lost so far this year.
Twelve or 18 months ago, it would have been relatively easy for these people to find work, says James Citrin, managing director of SpencerStuart, an executive recruitment firm based in Stamford, Conn.
When the U.S. economy as a whole was still going strong, employers recognized the value of a person who had entrepreneurial experience, whether the company was successful or not. The assumption was that a successful executive in a traditional company who got experience in the New Economy would be so much more attractive than one without such experience, he says.
"The problem now is that with the economy grinding to a halt, companies not only are not hiring but are in layoff mode. The actual number of openings and opportunities ranges from limited to shrinking, so it is very difficult for people who left Old Economy companies to try to come back now," said Citrin. "As a result, a lot of hiring companies are saying, 'Well, I guess all that New Economy experience wasn't as important as we thought it would be.'"
It is possible that people who left very senior positions at traditional corporations to take executive posts at dot-coms will have a tougher time than less senior people in returning to traditional companies. For example, Robert E. Mittelstaedt Jr., vice dean and director of Wharton executive education, cites Shaheen as an example. "I think he's damaged goods," says Mittelstaedt. "If you look at Shaheen, you have to say, how could a guy that smart think that overnight he's going to change the buying habits of Americans, especially in a low-margin industry that depends on high volume?"
Mittelstaedt, a former entrepreneur who has long believed that the emergence of e-commerce is significant but has been skeptical of how fast it would transform the face of business, says Webvan is based on a "crazy business model" and that Shaheen suffered from a case of "hubris."
"There's no other way to look at it. In the history of business, there are very few times when people change an industry overnight." He suggests Shaheen will have trouble convincing a new employer that "he's an operational genius."
John Challenger, CEO of Challenger, Gray and Christmas, says neither Shaheen nor other senior people who bolted from brick-and-mortar jobs for the Internet can be faulted for a willingness to take risks, although Shaheen might have fared better had he joined Webvan earlier. Still, Challenger notes, Shaheen's judgment could be called into question because he gave up such a premier job at Accenture. "He's damaged goods from the standpoint that what he did leave was one of the pinnacle jobs in the country."
In general, Challenger says, "for the high-profile, Fortune 500-type executives who left very senior jobs to go to dot-coms, that was probably too big a jump, and there may be a (question) as to whether they will ever achieve the positions they had before."
Shaheen--a veteran CEO who was brought in to nurture a young start-up--is just one kind of e-commerce executive who may try to re-enter the work force at a traditional company, Challenger adds. Another type consists of the founders who launched start-ups, some of whom will have a tough time selling themselves if they are seen as part of the freewheeling, free-spending culture often associated with e-commerce.
Traditional companies "will be concerned that these ex-presidents will be unhappy in any other role but the top job," says Challenger. This is especially true of young dot-com presidents who are not seasoned enough to run established companies but are unable or unwilling to serve as subordinates, even as subordinates in senior positions. What is more, some founders may simply price themselves out of the running by demanding too much.
Then there are the dot-com executives who have a lot of money and can bide their time looking for new opportunities, as well as people who used to have money but lost it and are urgently looking for work. Indeed, says Challenger, some well-heeled executives are considered gurus in their fields and for years have had teams of managers follow them from one dot-com to another. These teams "may be waiting for the guru to land in the next venture, but we don't know whether there's going to be another tech surge" and whether these people can wait for it, he adds.
Finally, Challenger says, there are two other types of job seekers. First there are the people who live and breathe the e-commerce ethos to such an extent that they cannot see themselves being happy in any other kind of organization. Then there are those optimistic individuals who will chalk up the dot-com fiasco as a lesson to be learned and cheerfully look for new jobs in any sector of the economy.
Challenger and Wharton management professor Nancy Rothbard say that any negative baggage a former executive may carry over from an e-commerce failure will be tempered by the respect a prospective employer is likely to have for the person's willingness to assume risk and learn from a difficult experience.
The relative ease with which dot-com managers will find new jobs in the e-commerce sector, Rothbard adds, depends largely on how tight the labor market is, since being let go by a bankrupt or struggling dot-com is unlikely to be held against anyone. "The no-risk, no-reward attitude is still prevalent among venture capitalists, start-ups and entrepreneurs in general. It's not specific to dot-coms."
Whether dot-com managers can land jobs in traditional companies depends on their level of previous corporate experience. "For those who have never worked in a corporate setting and have had freedom and autonomy, they may not even want to go into a corporation," Rothbard says. In fact, she says, such people may lack the experience needed to thrive in a large organization.
Raphael Amit, professor of entrepreneurship and management at Wharton, suggests that any hand-wringing over the issue of whether executives who left the corporate world for an e-commerce post can readily rejoin the world of traditional business is misplaced. If people are talented, he says, brick-and-mortar companies will be glad to get them.
"Many extremely competent senior executives have left (traditional) companies to explore dot-com companies," Amit says. "The very good ones, in my experience, have found a welcoming home in major corporations." He cites one senior executive who left General Motors to take an e-commerce position and then recently joined Ford Motor. "She managed her transition back quite well."
And what about the potential employability of those maverick dot-com founders? Says Amit: "Major corporations would welcome the experience these folks bring to the table. In the old days, they couldn't lay their hands on people with experience like that. One way to grow a business is internally. Who is better able to create new businesses than a person who has actually done it?"
To read more articles like this one, visit Knowledge@Wharton.
All materials copyright © 2001 of the Wharton School of the University of Pennsylvania.